KUALA LUMPUR, May 10 — The Johor government has announced plans to absorb RM3.19 million in Goods and Services Tax (GST) imposed on services provided by the local government, days after state ruler Sultan Ibrahim Sultan Iskandar criticised the use of the taxation system for government services.
Johor state housing and local government committee chairman Datuk Abdul Latif Bandi said the services include rental and licensing fees under the state government’s 16 local councils.
“The state government will absorb the GST costs for local councils, which are expected to be RM3.19 million involving 16 local councils state-wide this year.
“This amount is an estimate of how much the local councils would have to pay at the Customs Department,” Abdul Latif was quoted saying in a News Straits Times report.
He said that the Johor government has also sought for an exemption from the Urban Wellbeing, Housing and Local Government Ministry on the matter, so that GST will not be imposed on services provided by the state local councils.
“The request was conveyed to the minister Datuk Abdul Rahman Dahlan recently and we were told that the matter would be brought up in Cabinet,” Latif added.
On Thursday, Sultan Ibrahim was quoted by news portal Malaysiakini as saying that the state should not collect GST for “government services” as it should be considered the state’s responsibility to the public.
“I ask that the state and local governments not to impose GST on the services they render to the rakyat (people) and request for exemption from the federal government,” the state ruler was quoted saying in the news report as part of his opening address at the Johor state assembly.
“This does not make sense as government services are a basic responsibility to the rakyat and it is unreasonable that the rakyat should be further burdened with paying GST on them,” Sultan Ibrahim added.
The 6 per cent tax was only implemented on April 1 and the federal government had launched a drive to explain to people on the benefits of the tax.
Deputy finance minister Datuk Ahmad Maslan had been trying to explain the benefits of GST as opposed to the previous Sales and Services Tax (SST) system and that it has also reduced income tax rates for individuals and corporations.